SFB 303 Discussion Paper No. A - 288

Author: Karni, Edi
Title: Optimal Insurance: A Nonexpected Utility Analysis
Abstract: This paper reviews some of the recent developments in the theory of decision making under risk and apply them to selected problems in the theory of optimal insurance, namely, the choice of optimal insurance coverage, and the comparative statics analysis of the optimal insurance coverage with respect to the consumer's risk aversion. The analysis highlights the methodology of local expected utility analysis.
Keywords: Nonexpected utility, expected utility with rank-dependent probabilities, weighted utility, optimal insurance.
Creation-Date: May 1990
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